Wake Up to Wealth Podcast: Episode Summary
Title: The Secret of Investing in Dirt with Brandon Rooks
Host: Brandon Brittingham
Release Date: November 25, 2024

1. Introduction and Podcast Success [00:18 – 01:36]

In this episode of the Wake Up to Wealth podcast, host Brandon Brittingham welcomes listeners and introduces special guest Brandon Rockstar Rooks. Brandon R. expresses gratitude to the podcast audience, highlighting a significant milestone: “a few weeks ago, we hit number one in the United States in the investing category. We leapfrogged Dave Ramsey, which is pretty amazing considering how big of a show that guy has” (00:18). He credits this success to the unwavering support of the listeners and sets the stage for an insightful discussion with his colleague.

2. Brandon Rooks’ Background [01:36 – 06:14]

Brandon Rooks delves into his diverse professional journey, beginning with his service in the Navy as an anti-ship missile defense operator, participating in three Gulf tours during Desert Storm (01:36). Upon leaving the Navy, he transitioned into sales seamlessly, a field he describes as his inherent strength. Rooks recounts his early ventures, including selling MCI long-distance services, running a mobile DJ business, and moving into home water treatment sales. His foray into the mortgage industry in Kansas City marked the beginning of his real estate investment career.

Rooks emphasizes his innovative approach in the early 2000s: “Rather than me trying to figure out how much money I could make on the loan, I just charged all of my investors a 1.5% rate and then gave them a par rate. So I was beating every lender in the country by like, you know, a point on the rate” (06:14). This strategy not only secured his client base but also helped protect his investors during the 2008 real estate collapse, solidifying his reputation for integrity and reliability.

3. Transition to Land (Dirt) Investment [06:14 – 10:44]

After rebuilding his career post-bankruptcy in 2010, Rooks shifted focus towards real estate investments, initially exploring buy-and-hold strategies, fix-and-flip projects, and turnkey renovations. By 2015, he had successfully sold 954 rental doors across the U.S., but observed diminishing returns as cap rates and cash-on-cash returns began to decline.

This realization prompted Rooks to pivot towards raising private capital to invest in land, or "dirt," as he refers to it. “All we do now is investors invest with me. I lend it to my strategic partners in the Southeast. But we are in and out at dirt” (10:44). This niche presented a lower-risk, high-return opportunity by focusing on land acquisition and development rather than built properties, allowing for more predictable profit margins and fewer uncertainties.

4. The Pivotal Land Deal [13:44 – 15:35]

A turning point in Rooks’ career was a strategic land acquisition in Charlotte, North Carolina. He purchased the Oneida Parcel, a 99-townhome plot, for $3 million during the aftermath of the 2008 financial crisis. Tim Samuels from Ryan Holmes offered to buy the land for over $6 million shortly after, resulting in a substantial profit per door—“we were going to make like, yeah, we're going to make like 20,000 a door. But this made us make 33,000 a door” (15:35). This deal underscored the immense profitability of land investment over traditional development, prompting Rooks to scale this approach further.

5. Scaling the Business and Investor Relations [15:35 – 24:53]

Following the success of the Oneida Parcel deal, Rooks and his team expanded their land investment strategy, controlling approximately 56,000 lots with 33,000 already locked in. Rooks attributes this growth to strategic partnerships and a relentless focus on investor relations. He shares, “How do I make my investors money? If I help the same old Zig Ziglar thing—how if you help enough other people achieve their goals, you know, then you never have to worry about your own” (19:04).

Rooks highlights the importance of integrity and responsiveness in building trust with investors. “I’ve never let a call, email or text go unanswered in the same day. People want to feel important, you know, and my investors should feel important” (21:40). This dedication has fostered a loyal investor base, evidenced by his growth from 70 investors in 2017 to over 500, managing $75 million in capital.

6. Raising Capital: Strategies and Principles [24:30 – 28:56]

Rooks offers valuable insights into successful capital raising, emphasizing simplicity and transparency. He advises, “Keep it as simple as possible. ... if you can turn this into a simple debt offering, you're going to target a fixed return with some upside that you can spell out. People. Simple people say yes, complex people say no because they don't understand it” (25:28).

He discusses the importance of having a clear structure for investment offerings, recommending regulatory frameworks like 506B and Reg A Tier 2 to accommodate both accredited and non-accredited investors. Rooks believes in low minimum investments to attract a broader range of investors: “my offer has always been like 10,000 minimum, $1,000 shares. I want to ... make it so that anybody that wants to invest has the ability to invest” (26:04).

Rooks also underscores the significance of building a trustworthy team, leveraging family connections to maintain control and prevent fraud: “This is a family legacy. ... I really don't trust my investors to just anybody” (28:29).

7. The Philosophy of Waking Up to Wealth [35:40 – 39:50]

In discussing the core theme of the podcast, Rooks defines "waking up to wealth" as achieving financial freedom where passive income surpasses earned income. “To me at this stage in life it is freedom. ... waking up to wealth means I've achieved the level where my passive income exceeds my earned income” (35:55). He elaborates on the importance of not living paycheck to paycheck and the ability to take time off without compromising business operations.

Rooks emphasizes real estate as the most reliable path to wealth due to its stability and tangible value, contrasting it with the volatility of the stock market and cryptocurrencies. “The fastest path to wealth is through real estate. ... real estate has always outperformed both of those things” (38:19). His investment in land is portrayed as a strategic, low-risk method to build substantial and lasting wealth.

8. Closing Remarks [39:50 – 40:20]

Brandon R. concludes the episode by reiterating the significance of taking actionable steps towards financial independence. He encourages listeners to invest wisely, maintain integrity, and leverage the stability of real estate. The conversation wraps up with mutual expressions of gratitude and anticipation for future collaborations.

Notable Quotes:

• “We hit number one in the United States in the investing category. We leapfrogged Dave Ramsey...” – Brandon Rooks (00:18)

• “Rather than me trying to figure out how much money I could make on the loan, I just charged all of my investors a 1.5% rate...” – Brandon Rooks (06:14)

• “We are in and out at dirt. Dirt never changes, you know, it just gets, becomes more and more valuable.” – Brandon Rooks (10:44)

• “The fastest path to wealth is through real estate.” – Brandon Rooks (38:19)

• “If you can turn this into a simple debt offering, you're going to target a fixed return with some upside that you can spell out.” – Brandon Rooks (25:28)

Conclusion

In this episode, Brandon Rooks provides a comprehensive exploration of land investment as a formidable strategy for building wealth. Through personal anecdotes, strategic insights, and practical advice, Rooks illustrates the benefits of focusing on land ("dirt") over traditional real estate investments. His emphasis on integrity, investor relations, and simplicity in capital raising offers valuable lessons for both novice and seasoned investors aiming to "wake up to wealth."

For more insights and actionable advice on transforming your financial future, tune into the Wake Up to Wealth podcast with Brandon Brittingham every week.